The China slowdown is real and central banks pumping up stock markets with cash and confidence is not going to reverse that situation.
At some point, investors from Shanghai to New York, via London, will need to recognise that China is no longer a powerhouse for global growth.
Unfortunately, it looks as if the Jackson Hole meeting of central bankers in Wyoming this weekend will be an exercise in denial.
The Bank of England governor, Mark Carney, is intent on raising interest rates next year. His talk at Jackson Hole is expected to be a study in calm with an emphasis on the positives messages from the UK economy, which is growing robustly, in the words of most City economists.
At the moment, the spotlight is on the Federal Reserve, which is the first in the queue to start raising rates. The US central bank’s message is much the same. Yes, there will be a short delay to the expected date for a first interest rate increase, but all the signals are still pointing towards a normalisation of global growth, wages, inflation and interest rates.
There are other signals to consider, however. A shrug is not the appropriate reaction when Ford says it expects annual car sales in China to decline for the first time in 17 years. Likewise when Volkswagen recently revealed its first slide in deliveries to China in a decade.
China is the world’s largest car market and a bellwether for the financial health and confidence of most consumers. Chinese car production in June was down 5.3% compared with the previous month, and sales slumped 6.1% over the same period.
Not since December 2008, in the depths of the credit crunch, have the production and sales of passenger cars in China declined simultaneously. That should help convince all central bankers that talking up the market is a policy beyond its sell-by date.
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